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U.S.: Army Official to Help FBI in Halliburton Probe

Whistleblower attorney confirms the FBI had contacted him "requesting to interview" his client concerning an ongoing investigation regarding the Restore Iraqi Oil contract.

by David IvanovichThe Houston Chronicle
October 29th, 2004

WASHINGTON - The FBI wants to interview a top procurement official at the U.S. Army Corps of Engineers who has accused Army commanders of violating contracting rules to help Halliburton Co."squelch a political firestorm."

Bunnatine Greenhouse, the corps' "competition advocate," contends commanders improperly assigned a subordinate to examine possible fuel overcharges related to Halliburton's Iraqi oil contract to keep her "in the dark."

The Justice Department is conducting a criminal probe into the potential fuel overcharges, which Pentagon auditors calculate may have amounted to about $61 million.

On Thursday, Greenhouse's attorney Michael Kohn confirmed the FBI had contacted him "requesting to interview Ms. Greenhouse concerning an ongoing investigation regarding the Restore Iraqi Oil contract."

"We have agreed to participate and will be asking for assurances that Ms. Greenhouse will be protected from retaliation," Kohn said.

Halliburton spokeswoman Wendy Hall said Thursday company officials "continue to work with all of the investigating bodies to resolve the issues related to fuel delivery in Iraq."

FBI officials declined to comment on the probe. Carol Sanders, a spokeswoman for the Corps of Engineers, said "there have been a number of entities that are interested in this," including the FBI.

"We've been cooperating," Sanders said.

Under the Restore Iraqi Oil contract, Halliburton subsidiary KBR was responsible for trucking much-needed fuel into Iraq.

Halliburton officials have long contended the company had trucked in fuel from Kuwait at the best price possible and had actually saved taxpayers as much as $100 million by persuading the Army to permit imports from Turkey as well.

KBR had hired a Kuwaiti subcontractor to truck in the fuel, but the company was not able to provide the usual pricing data required.

The company sought a waiver of that requirement.

As the corps' "principal assistant responsible for contracting," Greenhouse contends she should have been consulted on the waiver request.

Instead, commanders "intentionally kept knowledge of the waiver request" from her, Greenhouse argued in a request for an investigation. Corps officials "clandestinely went to a subordinate" who commanders knew they could trust "to take actions he knew to be against Ms. Greenhouse's desires," she said.

That subordinate then recommended the corps approve the waiver.

That recommendation was sent up the line to Lt. Gen. Robert Flowers, the commander of the corps. He concluded the charges were "fair and reasonable," a decision Greenhouse asserts was "improper and illegal."

Greenhouse had raised a number of other objections to Halliburton's Iraq contract. When corps officials were considering awarding the sole-source contract to Vice President Dick Cheney's former employer in the winter of 2003, she objected to the contract's duration.

She complained that company officials were invited to sit in on meetings to discuss the contract, even before it was awarded.

The Kerry campaign, which has repeatedly raised the Halliburton controversy in the presidential race, jumped on word of the Justice Department probe Thursday.

"Good people came forward to tell the truth about these contracts because they, like the American people, know that the administration's special treatment of Halliburton was wrong," Democratic vice presidential nominee John Edwards said.

News of the FBI's interest in speaking with Greenhouse came as Halliburton was dealing with embarrassing news from another front, a report released Thursday by the former Coalition Provisional Authority's Inspector General.

Examining Halliburton's handling of property belonging to the Provisional Authority, the Inspector General's office surveyed 3,032 assets in Kuwait valued at $3.7 million.

Missing items ranged from utility trucks to a portable toilet.

The Inspector General's office recommended the Defense Contract Management Agency re-evaluate property control systems.

The Defense Contract Management Agency, however, disagreed, arguing the inspector's sampling was not representative of the properties under the company's control. Agency officials also argued Halliburton's control systems met contract requirements.

Halliburton spokeswoman Hall characterized the Inspector General's finding as "old news."

"Kuwait was a transit/staging area for much of the material that moved to CPA operations in Iraq, and many of the issues were immediately addressed, resolved or as DCMA stated, statistically not validly determined," Hall said.

Keith Ashdown, vice president for policy for Taxpayers for Common Sense, a government watchdog, observed: "It must be really hard to lose a Port-a-Potty."


Chronicle reporter Michael Hedges contributed to this story.





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